There is only a limited amount of Caribbean oceanfront property. The coastline is not as large as people think. To the north, Cancun, Puerto Morales, Playa del Carmen, Puerto Aventuras and even Tulum all make up the coastline knows as the Mayan Rivera. That area has had explosive growth. Property prices there rose dramatically, too! South of Rivera Maya is one of the largest natural preserves in the world, known as Sian Ka'an. Private ownership is allowed there, but is extremely restrictive and transportation to get is quite difficult.
To the south of Sian Ka'an is the region known as Costa Maya. This area is about 180km and extends all the way to Belize. This is the LAST remaining area on the Mexican Caribbean available at affordable prices...for now...
There are many US and Canadian citizens who have found the area and discovered how far their money can go in Costa Maya. There are many types of oceanfront properties that will suit everyone.
I have lived in Mahahual, Costa Maya, Mexico for over five years and own properties here myself so I am able to share my knowledge with others.
I also serve as Warden for the US Consulate Office for the region of Costa Maya. There are no licensing or oversight agencies to oversee real estate salespeople so you will find a great variance in the level of service, professionalism and even integrity of people who say they sell property. If you sit at any table in any bed and breakfast, bar or restaurant and drop so much as a mention that are looking for property you're in for a quick primer. If the person you are talking to doesn't have land for sale themselves they will know someone who does. Fact is, they are getting a referral fee for recommending someone to you. Their recommendation has nothing to do with the actual capability of the person you are about to risk you life savings with.
Here are some good indicators that the person you are talking with is really qualified.
• Do they or the company they represent have a certified escrow account in the U.S. or Canada? I'll discuss this more in this article below.
• Do they live in the area?
• If a foreigner, can they show you their valid passports and working visa?
• Can you contact ANY of their past clients on your own?
• Ask them how many other things they do...is real estate their full-time work or is it just a "side job"?
Once you have found someone you are comfortable with then the fun part begins. You should be telling the real estate person what your dream property looks like and they should be listening to you and showing your properties that match what you're searching for.
Now that you've found the perfect oceanfront property, you can complete an offer/contract agreement between the Seller, the real estate person and yourself. You should NEVER give a Seller your "earnest money" here in Mexico...only to an official escrow account...normally in the US or Canada. This will create a "paper trail" which is essential to assuring your investment is safe. A normal deposit amount is 10% unless the Seller is offering owner financing. In that case, 20% is the norm.
As of this writing, this is a Sellers' market, even in the aftermath of Hurricane Dean and the U.S. economic crisis and even the flu scare! This is because land in Costa Maya is still the least expensive oceanfront property on the Mexican Caribbean.
In Mexico a foreigner can not actually own property anywhere near the coastline. The Mexican government however, has provided two ways that foreign investors can safely obtain property
1. Mexican Corporation
We can set up a Mexican corporation as long as we have two board members of the corporation. This way the corporation holds the property and not you. There are some other benefits of having a Mexican corporation including being able to obtain a "work visa", known as a FM-3. With this you can live in Mexico and even have a bank account here.
Just as in the US or Canada a corporation must file financial reports and be responsible for taxes on income from the operation.
2. A Bank Trust (Fideicomiso)
A fideicomiso is made with a Mexican bank and they hold the property "in trust" for 50 years. After that period it can be renewed so in effect it is perpetual.
The bank will collect an annual fee (usually around $900usd) to maintain the trust in good standing.
These two choices may be a little confusing, but the process is actually very straight-forward. The Mexican attorney you work with should be the one who guides through the decision making process as to which of these is better for your particular use of the property. There are restrictions to either of these that you'll be made aware of.
Your attorney will also be responsible for collecting and reviewing all the Seller's documents before the actual transfer of title occurs whether you decide on a bank trust or a corporation. They will then take all the documents to a Notario, which is at the very top position of the legal ladder. Do not confuse this with the Notary Public's of the US. In the end, the Notario is the one who ensures that what you are buying is clear of debts and has a clear chain of title...very similar to the role of a title company in the U.S.
Both your attorney and the Notario should provide you a detailed proposal and timeline for their work before you move forward with them. Most of the attorneys and Notarios I recommend can complete their due diligence in about 90 days. There are a couple of periods of time in Mexico when all government offices are closed for the Christmas holidays...from around 15th of December to end of the first week in January and again at "Semana Santa" - Holy Week before Easter.
Here is a list of normal fees you should expect to pay for during the title transfer process. The only fee that a Seller is legally required to be responsible for is the capital gains tax. Your attorney will explain what the basis for this tax is...remember that one day you may be the Seller!
* Fees to obtain proof of tax payments
* Transfer tax of 2% plus a fixed amount according to a scale based on the appraised value of the property which goes to the Mexican government.
* A registration fee of .05% of assessed value of the property.
* Average of 2% for legal notary fees.
* Title search fees
* Miscellaneous office expenses.
* Total closing costs varies from State to State because each State sets the amount of taxes.
* Please note that these costs change from time to time and I cannot guarantee these amounts since I don't set them. They are for general estimating purposes only. Your attorney and Notario should give you a detailed statement prior to closing.Financing in this part of the Mexican Caribbean has never been available (even before the financial crisis) so all transactions are in cash. There ARE however, properties that offer owner financing. We have more of these listings than any other real estate company in the U.S. and there are standard contracts that protect the interests of both Buyers and Sellers in the transaction.
Contact: Kevin Graham
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